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Facebook vs Google: does size matter?

Facebook recently announced it has hit the major milestone of 500m users, following hot on the heels of the news that, in the US,
the site has overtaken Google for the first time. This is truly
remarkable growth for a site that only launched in 2004.

However, can we judge the effectiveness of Google vs Facebook based
simply on the size of their respective user bases? Should we be
diverting more budget towards Facebook at the expense of search?

To answer these questions, we have to get beyond the popular headlines and delve a little deeper into the numbers, so apologies in advance to any arithmophobiacs…

The size of opportunity

One useful measure of online advertising effectiveness is CTR (Click Through Rate). The average CTR for search is 1.27%, compared to 0.09% for display (ie the majority of advertising on Facebook).

In other words, people are 14 times more likely to click on an advertising message they encounter via search than one they see on Facebook. By this measurement you can suggest that Facebook would need around 7bn users in order to represent a similar sized opportunity as Google.

Bearing in mind that the entire world’s population isn’t expected to hit that figure until 2011, that’s asking a lot, even for Facebook.

True, Facebook is a much less mature advertising platform than search, meaning methods are not as advanced. However, with time marketers will learn how to improve the CTR they are getting from Facebook. For example, we are already seeing Facebook CTRs increase as a result of automated creative rotation. This combats creative blindness from the same creative being presented to the same user on a number of occasions.

Does size matter?

So, Facebook is undoubtedly growing in importance, but Google is still out in front, in terms of the size of opportunity. However, maybe size doesn’t really matter.

Whilst there are similarities between the two advertising platforms, they are essentially fighting different battles but for the same budget. It’s important to understand this size of opportunity that Facebook presents compared to Google. It is also worth remembering the subtle differences that exist between the two advertising platforms.

Search marketing has risen to prominence mostly based on its engagement, as opposed to the interruptive nature of traditional online display advertising. Search puts your brand in-front of consumers at the time they are signaling purchase intent for one of your products or services.

Conversely, Facebook is more of a hybrid between search marketing and traditional online display advertising. Whilst having a similar Cost Per Click (CPC) pricing model as paid search it still has the interruptive nature of traditional online display advertising.

Facebook takes this interruptive advertising to a more targeted level. By tapping into information in a user’s profile, as well as the enormous amount of personal information a user typically adds to their site every day, Facebook makes it possible for brands to target groups of people at an extremely granular level. You don’t just segment on basic demographics (age, gender etc) but can go as deep as targeting people on the basis of their favourite film.

Essentially, with search you’re buying keywords, but with Facebook you’re buying an audience.

But despite all of this, I still think there is a fundamental reason why search will remain extremely relevant for many years to come, and that is related to how people use Facebook.

Today, Facebook is used by most people to stay in touch and interact with others, whereas search is still the place that people start when they are looking to research and purchase a product or service.

Certainly, the engagement phase of a marketing campaign can take place on Facebook, and display ads can be used to build awareness and understanding. But when it comes down to the transaction, search is where it’s at.

Of course, you might be thinking that the transaction-based world of search would benefit hugely if it could be married to some of the segmentation of Facebook. And perhaps you’d be forgiven for then having the reaction that “my campaigns are way too complex already. There is no way I can do both.”

I think that you can and explaining how this is possible will be the subject of my next post. Stay tuned.

A few months ago, I wrote about how a large chunk of e-commerce’s future is extremely likely to lie with Facebook. The recent announcement of half a billion active members should be enough to have any e-commerce or marketing professional chomping at the bit to seize the opportunity, get engaged and start selling.

Surprisingly though, there seems to be a lack of exploration into the existing possibilities…

Over on Foursquare and Gowalla, badges are all the rage. Checked in to
your office bathroom more than five times? You’ve unlocked the dysentery
badge!

On other networks however, these tiny icons seems a little
superfluous. Logged in to Facebook 1000 times…so have all your
friends…

Still, this hasn’t deterred the founders of the roguishly named Twadges
from setting up a similar service for Twitter, awarding tweeters for
frequency, followers and obscure criteria such as ‘Joined Twitter before
Oprah’.

July 27th 201010:59

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Damon Westbury is Interim MD at European Broadcaster Exchange (EBX), a joint venture founded by some of Europe’s largest TV broadcasters (including Channel 4) to address the demand for brand-safe environments and high-quality online video campaigns. Westbury joined EBX from Clear Channel and has previously held roles at Microsoft. He tells us: “After starting my […]